Industry Internship and Report on “FINANCIAL STATEMENT ANALYSIS OF HONDA COMPANY LTD” BY VARUN KUMAR V 1NZ16MBA71 Submitted to DEPARTMENT OF MANAGEMENT STUDIES NEW HORIZON COLLEGE OF ENGINEERING, OUTER RING ROAD, MARATHALLI, BANGALORE In partial fulfillment of the requirements for the award of the degree of MASTER OF BUSINESS ADMINISTRATION Under the guidance of INTERNAL GUIDE EXTERNAL GUIDE NIVIYA FESTON HEMRAJ SENIOR ASSISTANT PROFESSOR BRACH MANAGER 2016-18 CERTIFICATE This is to certify that Varun Kumar V bearing USN 1NZ16MBA71, is a bonafide student of Master of Business Administration course of the Institute, Batch 2016-18, autonomous program, affiliated to Visvesvaraya Technological University, Belgaum. Internship report on “FINANCIAL STATEMENT ANALYSIS OF HONDA COMPANY LTD” is prepared by him under the guidance of Niviya Feston, in partial fulfillment of requirements for the award of the degree of Master of Business Administration of Visvesvaraya Technological University, Belgaum Karnataka. Signature of Internal Guide Signature of HOD Signature of Principal DECLARATION I, Varun Kumar V, hereby declare that the Internship report entitled “FINANCIAL STATEMENT ANALYSIS OF HONDA COMPANY LTD” with reference to “HONDA COMPANY LTD, Bangalore” prepared by me under the guidance of Niviya Feston, Senior Assistant Professor of M.B.A Department, New Horizon College of Engineering and external assistance by Hemraj, Branch manager, HONDA COMPANY LTD. I also declare that this Internship work is towards the partial fulfillment of the university regulations for the award of the degree of Master of Business Administration by Visvesvaraya Technological University, Belgaum. I have undergone a summer project for a period of Eight weeks. I further declare that this project is based on the original study undertaken by me and has not been submitted for the award of a degree/diploma from any other University / Institution. Signature of Student Place: Bangalore, Karnataka Date ACKNOWLEDGEMENT It is a genuine pleasure to express my deep sense of thanks and gratitude to the Principal of New Horizon College of Engineering, Dr.Manjunatha for providing us with a wonderful platform. I owe a deep sense of gratitude to Dr.Sheelan Misra, Head of Department of Management Studies for her support and encouragement. I am extremely thankful to Prof. Niviya Feston, Internal guide who has guided and corrected me in all the possible ways to get the best results. Her timely suggestions and enthusiasm has helped me complete the project report. I profusely thank Mr. HEMRAJ, who helped me explore the real corporate world, without whom I would not have been able to complete the study. It is my privilege to thank my family and friends who have constantly encouraged me throughout my study period and for their co-operation. Varun Kumar V 1NZ16MBA71 TABLE OF CONTENTS CHAPTER NO. PARTICUALRS PAGE NO. Executive Summary 1 Theoretical Background of the Study 1-14 2 Industry Profile and Company Profile 15-33 3 Research Methodology 34-38 4 Data analysis and Interpretation 39-50 5 Summary of Findings, Suggestions and Conclusion 51-52 6 Learning Experience 53 LIST OF TABLES Table No Particulars Page No 4.1 Showing the net profit turnover 39 4.2 Showing the solvency ratio 41 4.3 43 Showing the Debt-Equity ratio 4.4 45 Showing the net profit margin 4.5 47 Showing the Return on equity 4.6 Showing the cash turnover ratio 49 LIST OF GRAPHS Table No Particulars Page No 4.1 Showing the net profit turnover 40 4.2 Showing the solvency ratio 42 4.3 44 Showing the Debt-Equity ratio 4.4 46 Showing the net profit margin 4.5 48 Showing the Return on equity 4.6 Showing the cash turnover ratio 50 CHAPTER 1 THEORITICAL BACKGROUND OF THE STUDY INTRODUCTION Business concern needs finance to meet their requirement in the economic world. Any kind of business activity depends on the finance. Hence, it is called as lifeblood of business organization. Whether the business concerns are big or small, they need finance to fulfil their business activities. In the modern world, all the activities are concerned with the economic activities and very particular to earning profit through any venture or activities. The entire business activities are directly related with making profit. (according to the economic concept of factors of production, rent given to landlord, wage given to labour interest given to capital and profit given to shareholders or profiteers), a business concern needs finance to meet all the requirements. Hence finance may be called as capital, investment, fund etc. but each term is having different meanings and unique characters. Increasing the profit is the main aim of any kind of economic activity. Finance is the lifeblood of every business activity without which the wheels of modern business organization system cannot be greased. MEANING OF FINANCE Finance may be defined as the art and science of managing money. It includes financial service and financial instruments. Finance also is referred as the provision of money at the time when it is needed. Finance function is the procurement of funds and their effective utilization in business concerns. The concept of finance includes capital, funds, money, and amount. But each word is having unique meaning. Studying and understanding the concept of finance become an important part of the business concern. Definition of finance According to khan and Jain, “finance is the art and science of managing money”. 1 Types of finance Finance is one of the important and integral part of business concerns, hence, it plays a major role in every part of the business activities. It is used in all the area of the activities under the different names. Finance can be classified into two major parts: 4.3 FINANCIAL MANAGEMENT Finance management is managerial activity, which is concerned with planning and controlling of the firm’s financial Resources. It was a branch of economics till 1890, and as a separate discipline, it is of recent origin. Still, it has no unique body of knowledge of its own and draws heavily on economics for its theoretical concepts even today. Finance is a scarce resource and it has to be managed efficiency for the successful functioning of any company. Several companies have come to grief mainly because of inefficient management of finance in spite of other favourable conditions. 2 SCOPE OF FINANCIAL MANAGEMENT Financial management is one of the important part of overall management, which is directly related with various functional departments like personnel, marketing and production. Financial management covers wide area with multidimensional approaches. The following are the important scope of financial management. ➢ Financial management and economics Economic concepts like micro and macroeconomics are directly applied with the financial management approaches. Investment decisions, micro and macro environmental factors are closely associated with the functions of financial manager. Financial management also uses the economic equations like money value discount factor, economic order quantity etc. financial economics is one of the emerging area, which provides immense opportunities to finance, and economical areas. ➢ Financial management and accounting Accounting records includes the financial information of the business concern. hence, we can easily understand the relationship between the financial management and accounting. In the olden periods, both financial management and accounting are treated as a same decision. But nowadays financial management and accounting discipline are separate and interrelated. ➢ Financial management or mathematics Modern approaches of the financial management applied large number of mathematical and statistical tools and techniques. They are also called as econometrics. Economic order quantity, discount factor, time value of money, present value of money, cost of capital structure theories, dividend theories, ratio analysis and working capital analysis are used as mathematical and statistical tools and techniques in the field of financial management. 3 ➢ Financial management and production management Production management is the operational part of the business concern, with helps to multiple the money into profit. Profit of the concern depends upon the production performance. Production performance needs finance, because production department requires raw material, machinery, wages, operating expenses etc. these expenditures are decided and estimated by the financial department and the financial manager allocates the appropriate finance to production department. The financial manager must be aware of the operational process and finance required for each process of production activities. ➢ Financial management and marketing Produced goods are sold in the market with innovative and modern approaches. For this the marketing department needs finance to meet their requirements. The financial management is responsible to allocate the adequate finance to the marketing department. Hence, marketing and financial management are interrelated and depends on each other’s. ➢ Financial management and human resource Financial management is also related with human resource department, which provides manpower to all the functional areas of the management. Financial manager should carefully evaluate the requirement of manpower to each department and allocate the finance to the human resource department as wages, salary, remuneration, commission, bonus, pension and other monetary benefits to the human resource department.